energy insurance

There is an opportunity for investors or ILS funds to provide collateralised reinsurance capacity to the energy and power generation sectors, according to specialist MGA Twelve Specialist Risk.

With rates in the global property/catastrophe (P/C) space remaining under significant pressure insurance-linked securities (ILS) capacity is increasingly interested in specialty markets, such as energy. But with that market already facing a perfect storm of capacity, the pressure is only set to increase.

The London insurance and reinsurance market will see continued price softening in 2017, albeit at a reducing pace, according to PwC, which the consultancy believes will result in around a third of the market experiencing an underwriting loss next year.

According to Willis Towers Watson the energy industry faces a huge insurance shortfall, leaving many of the world’s largest energy companies exposed as they often find it hard to secure the level of insurance protection they really require.

The energy sector is increasingly vulnerable to the impacts of extreme weather events around the globe, highlighting a need for greater innovation and adoption of reinsurance & risk transfer solutions to mitigate potential losses and build sector resilience.

The energy insurance and reinsurance market has witnessed increasingly intense competition in recent times, as traditional and insurance-linked securities (ILS) participants look to the space, negatively impacting rates.

Buyers of energy insurance will benefit from increased competition and an accelerated softening of energy insurance rates at mid-year renewals, according to Marsh, as the impact of new and alternative sources of reinsurance capital spreads.